The Hot Summer of 1976 was memorable for the length of time without rain. It was also a time of industrial strife. And the year I first wondered why people had so little put by to cover for the bad times.
Maybe my family were different!
Mum took out insurance policies to pay for burial of each of us at birth, as child mortality was high and she had already lost two sons. Dad, the bread winner, of course had his own life insurance. It was the lack of financial security, not an excess of savings that motivated the family.
When in 1976 I started a new job as Personnel and Training Manager at a department store in the Midlands, it seemed extraordinary to me that no one had saved for the rainy day when the car factories ground to a halt and wages stopped. No savings and no insurance! During the same year one of my child hood friends was killed in a car crash, leaving his wife 8 months pregnant and a large mortgage. It turned out that they had no insurance, as it had seemed too expensive and not likely to be needed!
Since then, many things have changed. People got wealthier, the State provided through legislation or benefits, banks and insurance companies lost their reputation and the trust that my parent’s generation had in insurance was lost.
My mum and dad never claimed on those policies but I inherited them on their deaths. No premiums had been paid for decades but still they paid out. Tiny sums, as inflation had eroded the values, but never the less the insurance companies did what they had promised in the contract over 30 years earlier.
Today it is possible to insure against almost any risk and, comparatively speaking, at a much lower cost. So why do so many financial advisers overlook this basic financial need when they advise? To me, taking out a mortgage or taking on the responsibility of a family should mean taking on the cost of insurance cover. Not just any cheap cover but appropriate cover for the risks involved.
Cancer, heart attack and stroke account for almost 80% of all critical illness claims. As these are claims, there must have been a pay out! The alternative to having sufficient and appropriate cover and none is the difference between having time and money to recover and having to worry about benefit claims to pay for the basics.
The hardest thing for me, as an adviser, is to have to tell a client that they are uninsurable which has happened three times in 36 year. The second hardest is to tell a spouse or partner that their loved one did not make provision for the mortgage to be paid.
Sometimes difficult conversations are necessary before a client gets sick or has an accident, to wake them up to the reality of financial responsibility and their own vulnerability. Better that than when it is too late.